The Next Wave of Spectrum Reallocation - House

The Next Wave of Spectrum Reallocation:

The Value of Additional Mid-Band Spectrum Reallocations

PREPARED FOR

CTIA

PREPARED BY Coleman Bazelon

November 14, 2017

This report was prepared for CTIA. All results and any errors are the responsibility of the author and do not represent the opinion of The Brattle Group or its clients. Acknowledgement: I acknowledge the valuable contributions of many individuals to this report, and to the underlying analysis, including Valerie Tate.

Copyright ? 2017 The Brattle Group, Inc.

Table of Contents

Executive Summary ..............................................................................................................................ii I. Introduction................................................................................................................................. 1 II. Assessment of Relocation and Accommodation Costs .............................................................. 1

A. 1,300 MHz?1,390 MHz ...................................................................................................... 2 B. 1,780 MHz?1,830 MHz ...................................................................................................... 4 III. Assessment of Spectrum Value ................................................................................................... 6 A. Baseline Spectrum Valuation Model ................................................................................. 6

1. Upper Bound: AWS 3 Auction................................................................................. 7 2. Lower Bound: Incentive Auction ............................................................................ 7 3. New Demand: 5G and the Internet of Things......................................................... 9 4. Conclusion: The New Spectrum Value Baseline ................................................... 14 B. Valuation of 1,300 MHz?1,350 MHz Paired with 1,780 MHz?1,830 MHz.................. 16 C. Realizing Value ................................................................................................................ 17 Appendix A: Additional Details by Band .......................................................................................... 19 A. 1,300 MHz?1,350 MHz .................................................................................................... 19 B. 1,780 MHz?1,850 MHz .................................................................................................... 20 Appendix B: Effect of Impairments on Spectrum Value .................................................................. 22 A. Relative Price Analysis .................................................................................................... 23 B. Statistical Analysis............................................................................................................ 25 Appendix C: Cost Estimates for Relocation of the 1,780 MHz?1,830 MHz Band and 1,300 MHz?1,350 MHz Band.............................................................................................................. 30 A. 1,780 MHz?1,830 MHz Band .......................................................................................... 30 B. 1,300 MHz?1,350 MHz Band .......................................................................................... 34

i |

Executive Summary

Skyrocketing global demand for mobile wireless service, coupled with the coming of 5G networks and growth of the Internet of Things (IoT), underscores the continuing need and demand for licensed radio spectrum, including the need for a robust pipeline of spectrum below 3 GHz for exclusive, licensed services. Even after the AWS-3 auction significantly exceeded expectations, raising more than $40 billion, and an Incentive Auction that raised almost $20 billion, mid-band spectrum will continue to be an integral and valuable component of wireless networks. Consequently, I anticipate, based on two decades of experience predicting spectrum auction outcomes, that demand will stay strong for spectrum, including the mid-band frequencies needed to support mobile broadband networks. Given the significant transition times often required, now is the time to start the reallocations that will meet future spectrum demand beyond those auctions.

The spectrum bands identified herein are complementary to the AWS-3 spectrum in many ways. The 1,780 MHz?1,830 MHz band is directly adjacent to the AWS-3 band (at 1,755 MHz? 1,780 MHz), making it a logical extension for mobile broadband services. Additionally, the 1,300 MHz?1,350 MHz band is a lower frequency than the 2,155 MHz?2,180 MHz portion of the AWS-3 band, providing additional propagation benefits and offering the ability to provide more robust services to consumers with fewer base stations. Moreover, these spectrum bands are populated by federal incumbents that are similar (if not precisely the same) to those in the AWS3 band, allowing the previous accrual of knowledge concerning sharing and relocations to be leveraged as part of the accommodation of these incumbent federal users.

To that end, the analysis below provides an overview of the gross and net auction receipts expected from reallocating specific bands at 1,300 MHz?1,350 MHz and 1,780 MHz?1,830 MHz that are currently used by federal users. Specifically, after accounting for a moderation in spectrum value compared to recent highs, pairing 1,300 MHz?1,350 MHz with 1,780 MHz?1,830 MHz to provide a 50 MHz + 50 MHz paired band would be expected to raise $62.6 billion in auction receipts. Making those frequencies available would cost up to an estimated $7.93 billion to relocate existing users, providing them with at least equivalent and in many cases improved wireless infrastructure. Consequently, this band could be expected to raise $54.7 billion in net receipts.

ii |

The Federal Communications Commission (FCC) has a very good track record, having raised over $100 billion from spectrum auctions to date. Furthermore, demand for wireless broadband capacity will continue to grow at a robust pace, and increasing industry revenues will support acquisitions of additional spectrum. The direct carrier revenues for the wireless industry are approaching $200 billion per year, generating significant cash flows over the coming years to support further spectrum acquisitions of the levels estimated here.

iii |

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download